LVR = Who's offering the highest these days?

Discussion in 'Loans & Mortgage Brokers' started by FlippingDave, 16th Sep, 2017.

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  1. FlippingDave

    FlippingDave Member

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    Hi team

    Wanting to grab a second investment property but want to utilise my cash as much as possible.

    Is there anyone we know of offering 95% (or better haha) LVR for investment properties at the moment?

    Liberty might go 90% with LMI capitalised on top which seems a good (expensive rate) deal.
    Wondering if any lenders will go better in this day and age?

    Cheers
     
  2. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    I looked at this recently for a client and recall there were a couple of non-bank ones. LMI was exuberant, so it didn't make sense to go ahead with it. Once LMI is paid, you will lose the benefit of it if you choose to refinance later - so it is important to have the right lender for you. The property will need to grow substantially for you to be able to refinance it.
    Also, better to leave non-banks to later in your portfolio, wherever possible, unless that is all you service with.
     
  3. God_of_money

    God_of_money Well-Known Member

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    BOQ specialist 95%LVR with no LMI
     
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  4. FlippingDave

    FlippingDave Member

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    Thanks for your reply twin

    True, it is an expensive plan. Both the LMI and the 7-8% rate.
    Plan A is to get a turnkey duplex to help alleviate the repayments.
    Thinking to build in the Brisbane suburbs where growth may happen too allowing me to get upto 80% LVR so I can refinance out, asap of course

    I understand I'll have to wait until I have 80% equity before refinancing (to save paying LMI again).
     
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  5. FlippingDave

    FlippingDave Member

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  6. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Got a couple of small conditions. ;)

    Ta

    Rolf
     
  7. Redom

    Redom Mortgage Broker Business Plus Member

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    There are a few options with the non banks to do purchases at 95, rarely makes much sense given the cost vs benefit equation. However most of these options don't have construction loan offerings, so it may be more difficult to find options above 90 to build a duplex.
     
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  8. FlippingDave

    FlippingDave Member

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    Thanks @Redom

    I think I'll likely be aiming for a construction loan too, to minimise on stamp duty.

    Still, wondering who these other non banks are so I can quote some numbers and see if it's viable for me over the next few years..
    Rather than waiting months (years¿) until my deposit reaches 20%
     
  9. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    You don't need 20%, about 12% plus stamps will do it.
     
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  10. Archaon

    Archaon Well-Known Member

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    Do you have any equity in your current UP that you could borrow to pay the stampduty/deposit?

    Male sure you don't cross-collateralize while doing so.

    This way you will be borrowing 105% of the purchase price.

    Also, Liberty dont do construction loans, not sure on the other non-banks.
     
  11. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    You will save on stamp duty... but you do know there will be holding costs including interest while you build?
     
  12. FlippingDave

    FlippingDave Member

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    Cheers @Jess Peletier, that's what I paid for my first place (which is yet to be built / no equity). Keen to get in earlier with the second.

    I don't have any equity @Archaon but that is my plan in the future :) Will certainly try not to cross collateralize then too. Cheers

    I do thanks @Property Twins, I'm saving $1,300+ a week at the moment (no expenses) so not worried about that side of the serviceability, paying more in interest as the build portions are completed.


    I just want to get in earlier than later, for the possible future equity... You know, buy, hold & pray :D
     
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  13. Do Androids Dream

    Do Androids Dream Well-Known Member

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    Hi Property Twins, I was wondering if you mind please explaining this a little bit more to a newbie like myself? :)
     
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  14. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    Hi @Do Androids Dream

    When you pay LMI to one lender, e.g. you purchase a property at 88% LVR + LMI capitalised, you pay the LMI on the entire loan. As the property value grows, and you extract equity by topping up the loan to 89.9% again, then you pay LMI on the 'new money' only.

    If you choose to refinance the property to another lender, you can either refinance at 80% (assuming the value has grown), and therefore not pay LMI to the new lender. If you want to get further equity out and want to be in the LMI territory, you will have to pay LMI on the 'entire' loan. LMI is not transferable from one lender to another. As such, moving from one lender to another, you loose the benefit of the LMI paid to Lender 1.

    Where someone is purchasing an investment property at a higher LVR e.g. 95% including LMI, LMI at this LVR will be very high. To be able to refinance this - especially to a top tier lender will take a while - as some of these lenders are capping LVR to 90% for investment properties. The value will need to grow substantially. Often it is really 91.5% LVR plus LMI capitalised which takes you to 95% - so worthwhile saving a little more to make it 88% LVR + LMI capitalised.

    Correct lender selection is important - lenders ask questions on the purpose of cash out - but some lenders may make it harder than others.
     
  15. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    I understand. From personal experience good to take action in a rising market.

    However, hope is not a strategy :)
     
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  16. Watson1

    Watson1 Well-Known Member

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    HSBC do 90%+ cap and allow for interest only.

    However, investment loans you need to have an existing relationship with them to have access to investment loans. "Due to the Australian regulatory environment, new home loan investment lending with HSBC is currently reserved for existing HSBC customers^ only."
     
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  17. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    Liberty are a no go for construction!
     
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  18. Richard Taylor

    Richard Taylor Well-Known Member

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    Why not look at 100% cocktail loan with combo of 90% base loan and 10% P/L.
     
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  19. FlippingDave

    FlippingDave Member

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    Thanks @Mortgage Capital Australia.
    I actually only realised I could do this in the past week myself, although my serviceability will become lower, my new deposit amount should outweigh that loss..
    It's something I'm definitely considering now, thank you.